REVOLUTION: APRIL nineteen, 2011
The Greek Crisis: T
Misfortune or Chance?
By Nov 2010, George P
Papaconstantinou, the Ancient greek finance ressortchef (umgangssprachlich), was practically s
unaware of the daily chants of pr
rotesters in Metabolic rate Square outside the house his workplace. H considered He
if the policies his governme had adopted in the last year would allow it to avoid the ent
reorganization, rearrangement, reshuffling of the public debtвЂ”in effect, incomplete defaultвЂ”that many saw while likely, e n
even if only
many years ahead.
mouth campaign, George Papandreou, innovator of the Panhellenic
During his October 2009 electo
Socialist Movement (PASOK), had assured to strengthen cultural protection. Although t deb
government's estimates with the 2009 deficitвЂ”rising from several. 7% of GDP to six. 7% of GDPвЂ” 9
wildly positive. 1 Almost as soon a PASOK got office, and Papaconstantinou was na as
minister, he had concluded that the deficit can be twice as large: 12. 7% of GDP. 2 And by November 2010 the deficit for 2009 was determ
mined to obtain reached 15. 4% of GDP. several
As the deficit quantities worsened stressed financial markets had held demanding hig d,
costs on govt debt, at one po reaching almost 19%. In the long run, only an unexpected emergency loan via oint
the European Union (EU) as well as the International Financial Fund (IMF) in May 2010 had avoided e
standard. In return the federal government had passed a tough fiscal retrenchment, reducing incomes and pensions for general public employees, raisi the retirement, cutting services, and raising taxes. Today ing
Papandreou was calling for a major decrease in the quantity of public personnel. 4 c
Initial protests had been violent but backfired when rioters set flames to a bank in cen t
eradicating three people and surprising t general public. Subsequent protests had been moderate, as if the mood the
was even more one of resignation than um fury. PASOK survived the November 7, 2010, regional elections upon of
which Prime Ressortchef (umgangssprachlich) Papandreou, farreneheit
forced to change policies, got staked his future.
Ancient greek language bond brings had gone down sin the EU and IMF loans, but by simply late August yields upon two-year nce
bonds even now stood by 8. 7%. Such stee interest rates would not cause quick trouble to get Greece, ep
as EU and IMF loans would mee its demands for the next 36 months. But they directed to long lasting et
inquiries. When the EUROPEAN UNION and IMF loa system ended, might Greece have got its fiscal house to be able, or a great
would it ultimately have to defa or restructure its debt? ault
Although Portugal represented upon 2 . 6% of the GROSS DOMESTIC PRODUCT of the european areaвЂ”the selection of 17 countries nly
that had implemented the european as a com
mmon currencyвЂ”success or inability of the government's attempt to regain fiscal durability was lo
oaded with significance pertaining to Europe in general. 5 Greece had
catalyzed a Europe-wide sovereign personal debt crisis that was assessment European unanimity. ______________________________________________
Elderly Lecturer Dante Roscini, Analysis Associate Jonathan Schlefer, and Konstantinos Dimitriou (MBA 2009) prepared this ca HBS cases happen to be ase.
produced solely as the basis for class discussion. Circumstances are not meant to serve as endorsements, sources of main data, or illustrations of effective or perhaps ineffective management.
Copyright В© 2011 President and Fellows of Harvar College. To order replications or obtain permission to reproduce supplies, ca 1-800-545-7685, rd
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ransmitted, with no permission of Harvard Business School. photocopied, or otherwise produced, posted, or perhaps tr
The Traditional Crisis: Misfortune or Option?
GreeceвЂ”properly the Hellenic RepublicвЂ”stood at the suggestion of the Balkan peninsula in...